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Companies will face huge fines if they fail to appoint at least 40 per cent women to their boards within eight years, under proposals from Brussels.

Employers with at least 250 staff or a turnover of £40 million will be legally obliged to hit the target by 2020.

The European Union’s Justice Commissioner Viviane Reding said she had decided to pursue legally binding quotas because progress towards greater representation of women in boardrooms had been “very slow”.

Across the 27 EU countries, women hold 13.7 per cent of board posts in major companies and the figure is believed to be much lower in smaller firms. Within FTSE 100 companies, 17.2 per cent of directors are women.

The legislation, which is in draft form, will be strongly resisted by British industry and the Government. A Department for Business spokesman said: “Our position will still stand — we are opposed to legislation for quotas.”

However, under complex majority voting rules Britain might not be able to block the proposal if almost every other EU member supports it.

Companies failing to meet the quota could also be barred from public contracts, be ruled ineligible for EU subsidies or even be forced to rescind appointments of male directors. The final proposals are due to be published by the end of next month.

Within the EU, Finland has the highest proportion of women directors, at 27 per cent. But nine countries, including Italy, Greece and Ireland, are in single figures. Norway, which is not an EU member, has the highest proportion in the world with 42 per cent.

Last year, Ms Reding asked publicly listed EU companies to sign a pledge to increase female representation to 30 per cent by 2015 and 40 per cent by 2020, but only a handful of firms responded.

The draft directive says that at the current rate of progress it will take 40 years to reach 40 per cent in the EU.

But Britain’s 30% Club, a group of FTSE 100 chairmen backing voluntary increases in female board representation, rejected the proposals as “box ticking”.

It said: “The 30% Club believes quotas are not only unnecessary but potentially damaging and actually undermine the very equality the pro-quota lobby seeks. The numbers are lagging the attitude shift — but it is happening and, importantly, it is being driven by business reasons rather than political correctness.”